Important now: A value-based healthcare system can resolve the inefficiencies of the traditional model and deliver better, more effective outcomes for patients at much lower costs.

It may be that the oxygen in the city of Austin is laced with forward thinking particles because the city surely exhales copious innovations. Consistently holding the top spot in US cities for winning patent awards, receiving venture capital infusions and fostering new startups, innovation has been a part of the city’s DNA for at least a decade, especially in the tech space.

Now a new compulsion is bursting forth that could significantly shift the cultural branding of Austin: the creation of an Innovation District (ID) focused on health innovations. Its main mission is to re-haul how healthcare is delivered and bring a value-based healthcare system into reality. This will mean reducing chronic diseases over time, enhancing patient outcomes, significantly cutting medical costs, and compensating providers and suppliers based on quality results—all supported by a well-designed ecosystem to push it forward.

It’s a paradigm that abandons the traditional fee for service concept and is a driving force behind why the city has endorsed its development and why the citizens of Travis County (where Austin is the seat and largest city) voted in favor of a property tax increase in 2012 to bring it into being. The expected breakthroughs will not only benefit the people of Central Texas but the healthcare of society as a whole.

The projected economic impact of a successful ID is also alluring for Austin. In 2019, the Downtown Austin Alliance, the managing entity for the Public Improvement District in Austin’s central business district, commissioned a study by HR&A Advisors, Inc. and Perkins + Will which found that over the next ten years the ID has the potential to create 2,800 new permanent jobs and add $800 million to the economy (see more economic benefits in the graphic below).

A Blueprint for Success

Dozens of innovation districts in cities all over the world have blossomed in the past decade so there are plenty of examples to scrutinize and learn about the key elements for their success. “Innovation districts reach their potential when all three types of assets, [economic, physical and networking] combined with a supportive, risk-taking culture, are fully developed, creating an innovation ecosystem,” says Bruce Katz in a Cities Today article. Katz is the co-founder and director of the Nowak Metro Finance Lab at Drexel University. He is also a renowned author of extensive studies and books on innovation districts.   

Austin organically possesses all of these characteristics including deep support from the city and community. Even in the early stages Austin city leaders understood the merits of developing the ID in an underutilized quadrant of downtown, with former state senator Kirk Watson making it part of his 10-year plan for the city and county back in 2011. Current Mayor Steve Adler continues that support based on the long-term value for the citizens of Central Texas (see infographic below for most important elements of innovation districts).

“One of the main benefits we see for supporting the innovation district is that it will enhance the quality of life for Austinites,” says Sly Majid, chief service officer for Mayor Steve Adler. “It is also a significant benefit for a lot of folks who may not work or live in the district.”

Majid notes that the city is also exploring what it can do in the long term to support the physical infrastructure that will inevitably be required for the ID’s additional development. Already, the City Council is studying the benefits of expanding the Austin Convention Center and realigning the Red River Street, a main thoroughfare inside the District.

“We’re looking at investment in municipal spaces, infrastructure, and a commitment of leadership from elected officials,” says Majid. “We are exploring this opportunity and what it can mean to the city and region in the near term as well as the long term.”

Proximity and Knowledge Spill

When the Dell Medical School opened in 2015 (one of the newest fully accredited medical schools at a top-tier U.S. research university) it became a natural anchor for the ID and basically sealed the project’s destiny.

Located within the 123-acre, northeast quadrant of downtown Austin, the ID’s dwelling, Dell Medical School is central to a cluster of brainpower institutions, meeting another key component of thriving districts. In close proximity is the Dell Seton Medical Center (operated by Ascension), the University of Texas at Austin and the Central Downtown Health Campus. The synergies are powerful and the collaboration palpable (see map of Austin’s innovation district below).

Knowledge that spills across organizations focusing on different problems and issues leads to original insights, and interaction and rivalry among competitors fuels the drive to innovate,” says Julie Wagner, president of the Global Institute on Innovation Districts.

She emphasizes that universities and industry should be connected by short walkable blocks to ensure an efficient yield of knowledge spill. “R&D-laden universities and industries are likely to rely on density and proximity because tacit knowledge is exchanged through close connections and is difficult to translate and transfer over long distances,” says Wagner.

The Power of Collaboration

The proximity of the institutions is as critical as the collaboration between them.  “I think the most successful innovation districts grow organically and they have a mix of public, private, civic and university leadership, so, in the US, most districts evolve because of multi-sector leadership. The public, private, civic and university sectors in most cities collaborate all the time,” notes Katz.

The entity tasked with managing coordination between all stakeholders and fostering productive exchanges within the ID is Capital City Innovation, a non-profit founded by Central Health, Seton Healthcare and Dell Medical School and supported by Downtown Alliance and Opportunity Austin. The organization began operating in 2017 and is tasked with creating the programming that builds the culture around the ID. It is also deeply involved with bringing together the various stakeholders and serves as the central convener of discussions around planning and development in the district, notes Majid. “They provide the vision, strategic direction, and synergy among the organizations.”

The Downtown Alliance’s mission is to create, preserve and enhance the value and vitality of downtown Austin through full-time advocacy, strategic initiatives and thoughtful planning. It is funded by property value assessments within its public improvement district. “They are helping to manage the long-term planning and development of downtown and see the innovation district as a major opportunity for Austin’s foreseeable future,” says Majid. “They have been an incredible partner in making strategic investment and facilitating in the planning.” The Downtown Alliance represents the ownership of nearly 900 commercial properties in the Austin Downtown Public Improvement District.

From Bench to Bedside

With all the intellect and creative ideas pulsating within the walls of the ID institutions, a vehicle to get viable products and innovative solutions out to the marketplace is imperative. There’s an answer for that too: Texas Health CoLab (CoLab), a co-venture of the Dell Medical School and Texas Global Health Security (GHS), a co-venture of the University of Texas at Austin.

The CoLab focuses on the process to accelerate innovations from the testing phase to the commercial realm, according to Verena Kallhoff, manager of workspaces for the CoLab. She and her team vet out the potential of ideas at the research phase and helps them get from “the bench to the bedside.”

Kallhoff points out that innovations are typically at pre-company formation. “We may be approached by faculty or a student from Dell Medical School or the University who has an idea and thinks it can become a product, but doesn’t know how to go about it, even though they’re really great in developing the technical details,” she explains.

That’s why CoLab is such a vital part of the innovation process because when it comes to actually commercializing a product it takes a lot of different resources to come together.

“My colleagues and I look closely and determine what stage [a solution] is at. Sometimes they are at a point where they need a lot of clinical input or they need to do pre-clinical studies or a particular pharmacological intervention. Other times, they want to form a company and need to figure out if it should be an LLC or in some other form.”

In the overall picture, Vallhoff sees the CoLab as an ecosystem builder. At the beginning of the process her job is to vet out potential clinical collaborators to make sure their work is aligned with value-based care before allowing them to become tenants within the building.

“I have worked with tenants as well as other health innovators at Dell Medical Center, University of Texas and across the city of Austin to provide advice and importantly connect them to the resources they need, whether that is with an individual who has a particular knowledge, or companies that are in the workspaces,” notes Vallhoff.

GHS is a facilitator of innovations in the infectious disease space. “We support the work of incubators and companies that are coming up with technologies to address infectious diseases, such as COVID-19, in the long run,” says Lisa McDonald, director of health for the Austin Technology Incubator and co-founder of GHS. “We want to develop approaches to build the resiliency of our communities so we can keep something like COVID-19 from happening again.”

The group is currently working on a series of pilot projects that have come from its database of potential solutions, including EPISetmix, a company based in Pittsburgh that does a type of “agent based modeling,” which allows insights into various school reopening strategies and their outcomes based on disease burden.

“It’s a piece of technology that has the potential to inform administrators of the safety level of children at school,” says McDonald. “If you collect all of the relevant people in a room at the same time, it’s not difficult to make the right connections and speed inroads into Texas. We’re not putting funds into these companies we’re just identifying market or near market technologies that can benefit the state of Texas.”

Another example of GHS’s work is to advance the development of a technology that facilitates mass vaccination campaigns necessary with diseases like COVID-19. “We are supporting the work of Vaccine Systems in a variety of different ways. It’s about understanding what the priorities of the city and state are, what their plans are for mass vaccinations strategies and then directly supporting the technology development and the build out of that.”

McDonald emphasizes the goal of GHS is to align their needs with the priority areas the city is facing. “What that has meant for us on the innovation side is opening up lines of communication where we can understand what the needs of the city are and make them aware of our clearinghouse of innovations.”

She explains that when people are looking for partnerships, they often seek out the information from the city first to understand its public health objectives and appetite for innovations.

“When every different department is contacted by an innovator wanting something different, it’s difficult to navigate,” says McDonald. “We can perform that service by collecting all the interest in one place, going through de-risking, and due diligence and putting forth the most mature and relevant technology based on the state’s or city’s needs.”

Bringing all the disparate groups and institutions together and piloting them toward the same mission could be a counterproductive and confusing muddle but so far for Austin, it has been  collaboration at its best with enthusiasm and solid support from the city.

“There is an opportunity with the innovative district serving as a force multiplier of what was started with the Medical School and teaching hospital, says Majid of the mayor’s office.

“We want to facilitate the civic spaces and the private sector investment and development and infrastructure that will be required alongside that,” he says.

“If we can create a physical space where some of the best and brightest health researchers can help bring cutting edge health technologies to Central Texas specifically to the benefit of its residents then that is a big win for our community.”

For more information contact Capital City Innovation at: howdy@capitalcityinnovation.org or the Downtown Austin Alliance at: hello@downtownaustin.com. Or, go to Capital City Innovation’s website: https://www.capitalcityinnovation.org/ or the Downtown Alliance’s Innovation District website: https://downtownaustin.com/innovationdistrict